European stocks pull back

Deutsche Bank gains amid report of IB shake-up

By

EmilyChurch

KabirChibber

LONDON (CBS.MW) - German and French stocks declined Tuesday, giving back some gains after a broad-based three-day run in the Continental benchmark indexes and after downbeat updates on European auto sales and German investor confidence.

Declining summer sales data from a Western European auto industry association put the lackluster domestic demand in Europe back into focus, offsetting the recent optimism for the tech stocks and export-related stocks.

"Euroland growth was supposed to become increasingly driven by domestic demand as the recovery took hold. But car sales data for July and August rather confirm that the peak in the cycle was the first quarter of 2004," economists at Lombard Street Research concluded.

The monthly Zew survey, an influential measure of German confidence, was also weaker than expected and showed a decline in the economic expectations component of the survey in September to a low last seen in June 2003.

The German DAX Xetra 30 index (1876534) was down 0.1 percent at 3,948 and the French CAC 40 index (1804546) was down 0.5 percent to 3,708.

French media and telecoms group Vivendi Universal
V, -0.18%
(012777) raised its outlook for 2004 earnings after operating income rose 7 percent to 888 million euro in the second quarter, at the top range of expectations.

Vivendi's Chief Executive Jean-Rene Fourtou declared "the reorganization of Vivendi Universal is almost complete. Its financial position is restored." The company, which sold its film business to NBC, confirmed it expects to pay dividends in 2005; it now sees adjusted net income above 1 billion euro for 2004.

Fourtou also said the company plans to pursue "organic development" in European pay-tv, music, games and Telecom. Shares edged down 0.8 percent in Paris. On a conference call Tuesday he ruled out any major mergers or acquisitions, AFX News reported from Paris.

"We will make small or medium-size acquisitions," he said.

Car sales weak

New car registrations in Western Europe dropped 5.5 percent in July to 1.29 million, the ACEA association said. Registrations declined 1.3 percent in August.

"The market figures for the summer months, traditionally one of the weakest period, show a clear drop in July and an almost flat situation in August, reflecting current economic uncertainties in a number of countries," it concluded.

Year-to-August data show all brands 1.8 percent, led by Korean brands in terms of percentage growth. German auto stocks were mixed, with VW and DaimlerChrysler showed small gains and BMW was up 0.1 percent at the close.

Shares of Deutsche Bank
DB, -3.99%
Germany's largest bank, rose 2.4 percent after a report detailed plans for a shake-up of its investment banking division as well as job cuts.

Chief Executive Jozef Ackermann next week plans to make Anshu Jain and Michael Cohrs co-heads of investment banking and to remove Kevin Parker as head of equities, a report in Financial Times said.

Jain told Ackermann that he can add 1 billion euros to the investment bank's bottom line over the next two years by cutting back-office jobs and generating revenue by expanding away from some derivative products and into more mainstream cash equities and corporate bonds. Deutsche Bank officials declined to comment.

In Paris, shares of construction group Lafarge (012053) dropped 2.4 percent amid concerns the group for earnings growth. Lafarge cautioned that some analysts were too high on earnings estimates; however, the group also reiterated its outlook for earnings in a midday statement.

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